EXHIBIT 10.65
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of July 23, 1999,
by and among HomeCom Communications, Inc., a Delaware corporation, with
headquarters located at Fourteen Piedmont Center, Suite 100, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "COMPANY"), and the investor listed on the Schedule
of Buyers (the "SCHEDULE OF BUYERS") attached hereto (individually, a "BUYER" or
collectively "BUYERS").
WHEREAS:
A. The Company and the Buyers are executing and delivering this Agreement
in reliance upon the exemption from securities registration pursuant to Section
4(2) and/or Regulation D ("REGULATION D") at the sole election of Buyer in the
event that a registration statement filed by the Company pursuant to Section
2(a) of the Registration Rights Agreement (described below) is not declared
effective by the Registration Deadline (as defined therein) as promulgated by
the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 ACT");
B. The Company has authorized the following new series of its Preferred
▇▇▇▇▇, ▇.▇▇▇▇ par value per share (the "PREFERRED STOCK"): the Company's Series
C Convertible Preferred Stock (the "SERIES C PREFERRED SHARES"), which shall be
convertible into shares of the Company's Common Stock, $.0001 par value per
share (the "COMMON STOCK") (as converted, the "CONVERSION SHARES"), in
accordance with the terms of the Company's Certificate of Designations,
Preferences, and Rights of the Series C Convertible Preferred Stock,
substantially in the form attached hereto as Exhibit "A" (the "CERTIFICATE OF
DESIGNATIONS");
C. The Buyer wishes to purchase, upon the terms and conditions stated in
this Agreement, an aggregate of 175 shares of Series C Preferred Shares in the
respective amounts set forth opposite each Buyer's name on the Schedule of
Buyers;
D. Contemporaneously with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as Exhibit "B" (the "REGISTRATION
RIGHTS AGREEMENT") pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws; and
E. As set forth in Section 4(i) hereof and Section 2(i) of the Certificate
of Designations, the holders of Series C Preferred Shares shall receive stock
purchase warrants to acquire shares of Common Stock substantially in the form
attached as Exhibit "C."
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NOW THEREFORE, the Company and the Buyer hereby agree as follows:
1 . PURCHASE AND SALE OF SERIES C PREFERRED STOCK.
a. PURCHASE OF SERIES C PREFERRED STOCK. Subject to the satisfaction
(or waiver) of the conditions set forth in Sections 6 and 7 below, the
Company shall issue and sell to the Buyers and the Buyers shall purchase
from the Company an aggregate of 175 shares of Series C Preferred Stock, in
the respective amounts set forth opposite each Buyer's name on the Schedule
of Buyers (the "CLOSING").
b. CLOSING DATE. The date and time of the Closing (the "CLOSING DATE")
shall be 10:00 a.m. Eastern Standard Time, within five (5) business days
following the date hereof, subject to notification of satisfaction (or
waiver) of the conditions to the Closing set forth in Sections 6 and 7
below (or such later date as is mutually agreed to by the Company and the
Buyer). The Closing shall occur on the Closing Date at the offices of ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
c. FORM OF PAYMENT. On the Closing Date, (i) each Buyer shall pay the
purchase price to the Company for the Series C Preferred Shares to be
issued and sold to such Buyer at the Closing, by wire transfer of
immediately available funds in accordance with the Company's written wire
instructions, and (ii) the Company shall deliver to each Buyer,
certificates representing such Series C Preferred Shares which such Buyer
is then purchasing (as indicated opposite such Buyer's name on the Schedule
of Buyers), duly executed on behalf of the Company and registered in the
name of such Buyer or its designee (the "CERTIFICATES").
2. BUYER'S REPRESENTATIONS AND WARRANTEES.
Each Buyer represents and warrants with respect to only itself that:
a. INVESTMENT PURPOSE. Such Buyer (i) is acquiring the Series C
Preferred Shares, (ii) upon conversion of the Series C Preferred Shares,
will acquire the Conversion Shares then issuable, (iii) will acquire any
Warrants issuable, and (iv) upon exercise of the Warrants, will acquire the
shares of Common Stock issuable upon exercise thereof (the "WARRANT
SHARES") for its own account for investment only and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under the 1933
Act; provided, however, that by making the representations herein, such
Buyer does not agree to hold any Series C Preferred Shares, Conversion
Shares, Warrants, or Warrant Shares for any minimum or other specific term
and reserves the right to dispose of Series C Preferred Shares, Conversion
Shares, Warrants, or Warrant Shares at any time in accordance with or
pursuant to a registration statement or an exemption under the 1933 Act.
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b. ACCREDITED INVESTOR STATUS. Such Buyer is an "accredited investor"
as that term is defined in Rule 501(a)(3) of Regulation D.
c. RELIANCE ON EXEMPTIONS. Such Buyer understands that the Series C
Preferred Shares, the Conversion Shares, the Warrants, and the Warrant
Shares are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state
securities laws and that the Company is relying in part upon the truth and
accuracy of, and such Buyer's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such Buyer
set forth herein in order to determine the availability of such exemptions
and the eligibility of such Buyer to acquire such securities.
d. INFORMATION. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of
the Series C Preferred Shares, the Conversion Shares, the Warrants, and the
Warrant Shares, which have been requested by such Buyer. Such Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of
the Company. Neither such inquiries nor any other due diligence
investigations conducted by such Buyer or its advisors, if any, or its
representatives shall modify, amend or affect such Buyer's right to rely on
the Company's representations and warranties contained in Section 3 below.
Such Buyer understands that its investment in the Series C Preferred
Shares, the Conversion Shares, the Warrants, and the Warrant Shares
involves a high degree of risk. Such Buyer has sought such accounting,
legal and tax advice as it has considered necessary to make an informed
investment decision with respect to its acquisition of the Series C
Preferred Shares, the Conversion Shares, the Warrants, and the Warrant
Shares.
e. NO GOVERNMENTAL REVIEW. Such Buyer understands that no United
States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the
Series C Preferred Shares, the Conversion Shares, the Warrants, and the
Warrant Shares or the fairness or suitability of the investment in the
Series C Preferred Shares, the Conversion Shares, the Warrants, or the
Warrant Shares nor have such authorities passed upon or endorsed the merits
of the offering of the Series C Preferred Shares, the Conversion Shares,
the Warrants, or the Warrant Shares.
f. TRANSFER OR RESALE. Such Buyer understands that except as provided
in the Registration Rights Agreement: (i) the Series C Preferred Shares,
the Conversion Shares, the Warrants, and the Warrant Shares have not been
and are not being registered under the 1933 Act or any state securities
laws, and may not be offered for sale, sold, assigned or transferred unless
(a) subsequently registered thereunder, (b) such Buyer shall have delivered
to the Company an opinion of counsel, in a generally acceptable form, to
the effect that such securities to be sold, assigned or transferred may be
sold, assigned or transferred pursuant to an exemption from such
registration, or (c) such Buyer provides the Company with reasonable
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assurance that such securities can be sold, assigned or transferred
pursuant to Rule 144 promulgated under the 1933 Act, (ii) any sale of such
securities made in reliance on Rule 144 (or a successor rule thereto)
("RULE 144") may be made only in accordance with the terms of Rule 144 and
further, if Rule 144 is not applicable, any resale of such securities under
circumstances in which the seller (or the person through whom the sale is
made) may be deemed to be an underwriter (as that term is defined in the
▇▇▇▇ ▇▇▇) may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (iii) neither
the Company nor any other person is under any obligation to register such
securities under the 1933 Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder.
g. LEGENDS. Such Buyer understands that the certificates or other
instruments representing the Series C Preferred Shares, the Warrants and,
until such time as the sale of the Conversion Shares have been registered
under the 1933 Act as contemplated by the Registration Rights Agreement,
the stock certificates representing the Conversion Shares, and the Warrant
Shares shall bear a restrictive legend in substantially the following form
(and a stop transfer order may be placed against transfer of such stock
certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SAID ACT.
The legend set forth above shall be removed and the Company shall
issue a certificate without such legend to the holder of the Series C
Preferred Shares, the Conversion Shares, the Warrants, or the Warrant
Shares upon which it is stamped, if, unless otherwise required by state
securities laws, (i) the sale of the Conversion Shares or the Warrant
Shares is registered under the 1933 Act, (ii) in connection with a sale
transaction, such holder provides the Company with an opinion of counsel,
in a generally acceptable form, to the effect that a public sale,
assignment or transfer of the Series C Preferred Shares, the Conversion
Shares, the Warrants, or the Warrant Shares may be made without
registration under the 1933 Act, or (iii) such holder provides the Company
with reasonable assurances that the Series C Preferred
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Shares, the Conversion Shares, the Warrants, or the Warrant Shares can be
sold pursuant to Rule 144 without any restriction as to the number of
securities acquired as of a particular date that can then be immediately
sold.
h. AUTHORIZATION, ENFORCEMENT. This Agreement has been duly and
validly authorized, executed and delivered on behalf of such Buyer and is a
valid and binding agreement of such Buyer enforceable in accordance with
its terms, subject as enforceability to general principles of equity and to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
and other similar laws relating to, or affecting generally, the enforcement
of applicable creditors' rights and remedies.
i. RESIDENCY. Such Buyer is a resident of that country specified in
its address on the Schedule of Buyers.
j. NO SCHEME TO EVADE REGISTRATION. Buyer represents and warrants to
the Company that the acquisition of the Series C Preferred Stock and the
Conversion Shares is not a transaction (or any element of a series of
transactions) that is part of a plan or scheme by the Buyer to evade the
registration provisions of the 1933 Act.
3 . REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that:
a. ORGANIZATION AND QUALIFICATION. The Company and its subsidiaries
are corporations duly organized and validly existing in good standing under
the laws of the jurisdiction in which they are incorporated, and have the
requisite corporate power to own their properties and to carry on their
business as now being conducted. Each of the Company and its subsidiaries
is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the business
conducted by it makes such qualification necessary, except to the extent
that the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries taken as a
whole.
b. AUTHORIZATION, ENFORCEMENT, COMPLIANCE WITH OTHER INSTRUMENTS. (i)
The Company has the requisite corporate power and authority to enter into
and perform this Agreement, the Registration Rights Agreement and any
related agreements, and to issue the Series C Preferred Shares, the
Conversion Shares, the Warrants, and the Warrant Shares in accordance with
the terms hereof and thereof, (ii) the execution and delivery of this
Agreement, the Registration Rights Agreement and any related agreements by
the Company and the consummation by it of the transactions contemplated
hereby and thereby, including without limitation the issuance of the Series
C Preferred Shares and the Warrants and the reservation for issuance and
the issuance of the Conversion Shares and the Warrant Shares issuable upon
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conversion or exercise thereof, have been duly authorized by the Company's
Board of Directors and no further consent or authorization is required by
the Company, its Board of Directors or its stockholders, (iii) this
Agreement and the Registration Rights Agreement and any related agreements
have been duly executed and delivered by the Company, (iv) this Agreement,
the Registration Rights Agreement and any related agreements constitute the
valid and binding obligations of the Company enforceable against the
Company in accordance with their terms, except as such enforceability may
be limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors' rights
and remedies, and (v) prior to the Closing Date, the Certificate of
Designations has been filed with the Secretary of State of the State of
Delaware and will be in full force and effect, enforceable against the
Company in accordance with its terms.
c. CAPITALIZATION. As of the date hereof, the authorized capital stock
of the Company consists of 100,000,000 shares of Common Stock, of which as
of the date hereof ______________________ shares were issued and
outstanding, and 10,000,000 shares of Preferred Stock of which 125 shares
of Series B Convertible Preferred Stock were issued and outstanding. All of
such outstanding shares have been validly issued and are fully paid and
nonassessable. Except as disclosed in Schedule 3(c), no shares of Common
Stock or preferred stock are subject to preemptive rights or any other
similar rights or any liens or encumbrances suffered or permitted by the
Company. Except as disclosed in Schedule 3(c), as of the effective date of
this Agreement, (i) there are no outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of
capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of
its subsidiaries is or may become bound to issue additional shares of
capital stock of the Company or any of its subsidiaries or options,
warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into,
any shares of capital stock of the Company or any of its subsidiaries, (ii)
there are no outstanding debt securities and (iii) there are no agreements
or arrangements under which the Company or any of its subsidiaries is
obligated to register the sale of any of their securities under the 1933
Act (except the Registration Rights Agreement). There are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Series C Preferred Shares, the Conversion
Shares, the Warrants, or the Warrant Shares as described in this Agreement.
The Company has furnished to the Buyer true and correct copies of the
Company's Certificate of Incorporation, as amended and as in effect on the
date hereof (the "CERTIFICATE OF INCORPORATION"), and the Company's Bylaws,
as in effect on the date hereof (the "BY-LAWS"), and the terms of all
securities convertible into or exercisable for Common Stock and the
material rights of the holders thereof in respect thereto.
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d. ISSUANCE OF SECURITIES. The Series C Preferred Shares are duly
authorized and, upon issuance in accordance with the terms hereof, shall be
(i) validly issued, fully paid and nonassessable, are free from all taxes,
liens and charges with respect to the issue thereof and are entitled to the
rights and preferences set forth in the Series C Preferred Shares. The
Conversion Shares issuable upon conversion of the Series C Preferred Shares
have been duly authorized and reserved for issuance. Upon conversion or
exercise in accordance with the Series C Preferred Shares or the Warrants,
the Conversion Shares and the Warrant Shares will be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof, with the holders being entitled to all rights
accorded to a holder of Common Stock.
e. NO CONFLICTS. Except as disclosed in Schedule 3(e), the execution,
delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby will
not (i) result in a material violation of the Certificate of Incorporation,
any Certificate of Designations, Preferences, and Rights of any outstanding
series of preferred stock of the Company or By-laws or (ii) conflict with
or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any material
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state
securities laws and regulations and the rules and regulations of the
principal market or exchange on which the Common Stock is traded or listed)
applicable to the Company or any of its subsidiaries or by which any
property or asset of the Company or any of its subsidiaries is bound or
affected. Except as disclosed in Schedule 3(e), neither the Company nor its
subsidiaries is in violation of any term of or in default under its
Certificate of Incorporation or Bylaws or their organizational charter or
by-laws, respectively, or any material contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any
statute, rule or regulation applicable to the Company or its subsidiaries.
The business of the Company and its subsidiaries is not being conducted,
and shall not be conducted in violation of any law, ordinance, or
regulation of any governmental entity. Except as specifically contemplated
by this Agreement and as required under the 1933 Act and any applicable
state securities laws, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or perform
any of its obligations under or contemplated by this Agreement or the
Registration Rights Agreement in accordance with the terms hereof or
thereof except as disclosed in Schedule 3(e). All consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or
prior to the date hereof.
f. SEC DOCUMENTS: FINANCIAL STATEMENTS. Since January 1, 1999, the
Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it
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with the SEC pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "1934 ACT") (all of the foregoing
filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein, being hereinafter referred to as the "SEC DOCUMENTS").
The Company has delivered to the Buyer or its representative true and
complete copies of the SEC Documents. As of their respective dates, the
financial statements of the Company attached as Schedule 3(f) hereto (the
"FINANCIAL STATEMENTS") complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may
exclude footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the Company as
of the dates thereof and the results of its operations and cash flows for
the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments).
g. ABSENCE OF CERTAIN CHANGES. Except as disclosed in Schedule 3(g),
since January 1, 1999, there has been no material adverse change and no
material adverse development in the business, properties, operations,
financial condition, results of operations or prospects of the Company or
its subsidiaries. The Company has not taken any steps, and does not
currently expect to take any steps, to seek protection pursuant to any
bankruptcy law nor does the Company or its subsidiaries have any knowledge
or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings.
h. ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge
of the Company or any of its subsidiaries, threatened against or affecting
the Company, the Common Stock or any of the Company's subsidiaries, wherein
an unfavorable decision, ruling or finding would (i) have a material
adverse effect on the transactions contemplated hereby (ii) adversely
affect the validity or enforceability of, or the authority or ability of
the Company to perform its obligations under, this Agreement or any of the
documents contemplated herein or (iii), except as expressly set forth in
Schedule 3(h), have a material adverse effect on the business, operations,
properties, financial condition or results of operation of the Company and
its subsidiaries taken as a whole.
i. ACKNOWLEDGMENT REGARDING BUYER'S PURCHASE OF SERIES C PREFERRED
SHARES. The Company acknowledges and agrees that the Buyer is acting solely
in the capacity of an arm's length purchaser with respect to this Agreement
and the transactions contemplated hereby.
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j. NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES.
No event, liability, development or circumstance has occurred or exists, or
is contemplated to occur, with respect to the Company or its subsidiaries
or their respective business, properties, prospects, operations or
financial condition, which could be material but which has not been
publicly announced or disclosed in writing to the Buyer.
k. NO GENERAL SOLICITATION. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in
any form of general solicitation or general advertising (within the meaning
of Regulation D under the ▇▇▇▇ ▇▇▇) in connection with the offer or sale of
the Series C Preferred Shares, the Conversion Shares, the Warrants, or the
Warrant Shares.
1. NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any
offers to buy any security, under circumstances that would require
registration of the Series C Preferred Shares, the Conversion Shares, the
Warrants, and the Warrant Shares under the 1933 Act or cause this offering
of Series C Preferred Shares, the Conversion Shares, the Warrants, or the
Warrant Shares to be integrated with prior offerings by the Company for
purposes of the 1933 Act or any applicable stockholder approval provisions.
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m. EMPLOYEE RELATIONS. Neither the Company nor any of its subsidiaries
is involved in any labor dispute nor, to the knowledge of the Company or
any of its subsidiaries, is any such dispute threatened. None of the
Company's or its subsidiaries' employees is a member of a union and the
Company and its subsidiaries believe that their relations with their
employees are good.
n. TITLE. The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to
all personal property owned by them which is material to the business of
the Company and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 3(p) or
such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries. Any real property and facilities held under
lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material
and do not interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries.
o. REGULATORY PERMITS. The Company and its subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their
respective businesses, and neither the Company nor any such subsidiary has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.
p. TAX STATUS. Except as set forth on Schedule 3(u), the Company and
each of its subsidiaries has made or filed all federal and state income and
all other tax returns, reports and declarations required by any
jurisdiction to which it is subject (unless and only to the extent that the
Company and each of its subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and
has paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports
and declarations, except those being contested in good faith and has set
aside on its books provision reasonably adequate for the payment of all
taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know of no basis for any such claim.
q. FEES AND RIGHTS OF FIRST REFUSAL. The Company is not obligated to
offer the securities offered hereunder on a right of first refusal basis or
otherwise to any third parties including, but not limited to, current or
former shareholders of the Company, underwriters, brokers, agents or other
third parties.
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r. SHAREHOLDER APPROVAL The Company covenants to submit to its
shareholders at its next shareholder meeting a proposal for ratification of
the issuance of the Series C Preferred Stock and the Conversion Shares, if
and as required by the rules of the National Association of Securities
Dealers, Inc. (the "NASD") applicable to the transaction.
4. COVENANTS.
a. BEST EFFORTS. Each party shall use its best efforts timely to
satisfy each of the conditions to be satisfied by it as provided in
Sections 6 and 7 of this Agreement.
b. FORM D. The Company agrees to file a Form D with respect to the
Series C Preferred Shares and the Conversion Shares as required under
Regulation D and to provide a copy thereof to each Buyer promptly after
such filing. The Company shall, on or before the Closing Date, take such
action as the Company shall reasonably determine is necessary to qualify
the Series C Preferred Shares and the Conversion Shares for, or obtain
exemption for the Series C Preferred Shares and the Conversion Shares for,
sale to the Buyers at the Closing pursuant to this Agreement under
applicable securities or "Blue Sky" laws of the states of the United
States, and shall provide evidence of any such action so taken to the
Buyers on or prior to the Closing Date.
c. REPORTING STATUS. Until the earlier of (i) the date as of which the
Investors (as that term is defined in the Registration Rights Agreement)
may sell all of the Conversion Shares without restriction pursuant to Rule
144(k) promulgated under the 1933 Act (or successor thereto), or (ii) the
date on which (A) the Investors shall have sold all the Conversion Shares
and (B) none of the Series C Preferred Shares is outstanding (the
"REGISTRATION PERIOD"), the Company shall file all reports required to be
filed with the SEC pursuant to the 1934 Act, and the Company shall not
terminate its status as an issuer required to file reports under the 1934
Act even if the 1934 Act or the rules and regulations thereunder would
otherwise permit such termination.
d. USE OF PROCEEDS. The Company will use the proceeds from the sale of
the Series C Preferred Shares for substantially the same purposes and in
substantially the same amounts as indicated in Schedule 4(d).
e. FINANCIAL INFORMATION. The Company agrees to send the following to
each Buyer during the Registration Period: (i) within five (5) days after
the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K,
its Quarterly Reports on Form 10- Q, any Current Reports on Form 8-K and
any registration statements or amendments filed pursuant to the 1933 Act;
(ii) within one (1) day after release thereof, copies of all press releases
issued by the Company or any of its subsidiaries and (ii) copies of the
same notices and other information
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given to the stockholders of the Company generally, contemporaneously with
the giving thereof to the stockholders.
f. RESERVATION OF SHARES. The Company shall take all action necessary
to at all times have authorized, and reserved for the purpose of issuance,
no less than 100% of the number of shares of Common Stock needed to provide
for the issuance of the Conversion Shares and Warrant Shares; provided that
all shares of the Common Stock authorized and not otherwise reserved for
other purposes as of the date hereof shall be reserved for the purpose of
issuance of the Conversion Shares.
g. LISTINGS. The Company shall promptly secure the listing of all
Registrable Securities (as defined in the Registration Rights Agreement)
upon each national securities exchange or automated quotation system, if
any, upon which shares of Common Stock are then listed (subject to official
notice of issuance) and shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all Conversion Shares from
time to time issuable under the terms of this Agreement and the
Registration Rights Agreement. The Company shall maintain the Common
Stock's authorization for quotation in the over- the counter market. The
Company shall promptly provide to each Buyer copies of any notices it
receives regarding the continued eligibility of the Common Stock for
trading on the Nasdaq SmallCap Market-TM-.
h. EXPENSES. Each of the Company and the Buyer shall pay all costs and
expenses incurred by such party in connection with the negotiation,
investigation, preparation, execution and delivery of this Agreement and
the Registration Rights Agreement.
i. WARRANT ISSUANCES. At Closing, the Company shall issue to each
Buyer warrants to acquire [16,667] shares of Common Stock for each one
million dollars ($1,000,000) invested in the form as attached as Exhibit
"C" hereto. The Company shall, in addition to the Warrants otherwise
issuable hereunder, issue to each Buyer such Warrants (the "LOCK-UP
WARRANTS") as may be issuable to a Buyer pursuant to Section 2(i) of the
Certificate of Designations. Each Warrant issued hereunder (including
pursuant to Section 2(i) of the Certificate of Designations) shall be
immediately exercisable and shall expire (to the extent not exercised) on
the fifth (5th) anniversary of its issuance date.
j. NO SHORT SALES OF THE COMMON STOCK. So long as (i) a Buyer or any
of its affiliates beneficially owns any of Series C Preferred Shares, (ii)
the Company has not issued any publicly traded convertible securities and
(iii) the Issuer is not in material default under the terms of the Series C
Preferred Shares, each Buyer and its affiliates shall not directly or
indirectly engage in any short sales or third party short sales of the
Company's Common Stock or hold a "put equivalent position" with respect to
the Common Stock (as defined in Rule 16a-1 under the 1934 Act).
13
5. TRANSFER AGENT INSTRUCTIONS.
The Company shall issue irrevocable instructions to its transfer agent to
issue certificates, registered in the name of the Buyer or its respective
nominee(s), for the Conversion Shares and Warrant Shares in such amounts as
specified from time to time by the Buyer to the Company upon conversion of the
Series C Preferred Shares or exercise of the Warrants (the "IRREVOCABLE TRANSFER
AGENT INSTRUCTIONS"). Prior to registration of the Conversion Shares and Warrant
Shares under the 1933 Act, all such certificates shall bear the restrictive
legend specified in Section 2(g) of this Agreement. The Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 5, and stop transfer instructions to give effect to Section 2(g)
hereof (in the case of the Conversion Shares and Warrant Shares, prior to
registration of such shares under the ▇▇▇▇ ▇▇▇) will be given by the Company to
its transfer agent and that the Series C Preferred Shares, the Conversion
Shares, the Warrants, and the Warrant Shares shall otherwise be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement and the Registration Rights Agreement. Nothing in
this Section 5 shall affect in any way the Buyer's obligations and agreement to
comply with all applicable securities laws upon resale of the Series C Preferred
Shares, the Conversion Shares, the Warrants, and the Warrant Shares. If the
Buyer provides the Company with an opinion of counsel, satisfactory in form and
substance to the Company, that registration of a resale by the Buyer of any of
the Series C Preferred Shares, the Conversion Shares, the Warrants, or the
Warrant Shares is not required under the 1933 Act, the Company shall permit the
transfer, and, in the case of the Conversion Shares or the Warrant Shares,
promptly instruct its transfer agent to issue one or more certificates in such
name and in such denominations as specified by the Buyer.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Series C
Preferred Shares to the Buyer at the Closing is subject to the satisfaction, at
or before the Closing Date, of each of the following conditions, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion:
a. The Buyer shall have executed this Agreement and the Registration
Rights Agreement and delivered the same to the Company.
b. The Certificate of Designations shall have been filed with the
Secretary of State of the State of Delaware.
c. The Buyer shall have delivered to the Company the Purchase Price
for the Series C Preferred Shares being purchased by the Buyer at the
Closing by wire transfer of immediately available funds pursuant to the
wire instructions provided by the Company.
14
d. The representations and warranties of the Buyer shall be true and
correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Buyer at or prior to the
Closing Date.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer hereunder to purchase the Series C Preferred
Shares at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are
for the Buyer's sole benefit and may be waived by the Buyer at any time in its
sole discretion:
a. The Company shall have executed this Agreement and the Registration
Rights Agreement, and delivered the same to the Buyer.
b. The Common Stock shall be authorized for quotation on the Nasdaq
SmallCap Market-TM- and trading in the Common Stock shall not have been
suspended for any reason and all of the Conversion Shares issuable upon
conversion of the Series C Preferred Shares shall be approved for listing.
c. The representations and warranties of the Company shall be true and
correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in
Section 3 above, in which case, such representations and warranties shall
be true and correct without further qualification) as of the date when made
and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date) and the
Company shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or
prior to the Closing Date. The Buyer shall have received a certificate,
executed by the Chief Executive Officer of the Company, dated as of the
Closing Date, to the foregoing effect and as to such other matters as may
be reasonably requested by the Buyer including, without limitation an
update as of the Closing Date regarding the representation contained in
Section 3(c) above.
d. The Buyer shall have received the opinion of the Company's counsel
dated as of the Closing Date, in form, scope and substance reasonably
satisfactory to the Buyer and in substantially the form of Exhibit "D"
attached hereto.
15
e. The Company shall have executed and delivered to the Buyer the
Certificates (in such denominations as the Buyer shall request) for the
Series C Preferred Shares being purchased by the Buyer at the Closing.
f. The Board of Directors of the Company shall have adopted the
resolutions in substantially the form of Exhibit "E" attached hereto.
g. As of the Closing Date, the Company shall as of the Closing Date
have reserved out of its authorized and unissued Common Stock, solely for
the purpose of effecting the conversion of the Series C Preferred Shares,
such number of shares of Common Stock equal to or greater than 100% of the
number of shares of Common Stock for which are issuable upon conversion of
all of the Series C Preferred Shares, and the Warrant Shares could be
issued at any time under this Agreement.
h. The Irrevocable Transfer Agent Instructions, in form and substance
satisfactory to the Buyer, shall have been delivered to and acknowledged in
writing by the Company's transfer agent.
8. INDEMNIFICATION.
In consideration of the Buyer's execution and delivery of this Agreement
and acquiring the Series C Preferred Shares, the Conversion Shares, and the
Warrants, and the Warrant Shares hereunder and in addition to all of the
Company's other obligations under this Agreement, the Company shall defend,
protect, indemnify and hold harmless the Buyer and each other holder of the
Series C Preferred Shares, the Conversion Shares, and the Warrants, and the
Warrant Shares and all of their officers, directors, employees and agents
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "INDEMNITEES")
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by
the Indemnitees or any of them as a result of, or arising out of, or relating to
(a) any misrepresentation or breach of any representation or warranty made by
the Company in this Agreement, the Series C Preferred Shares, the Warrants, or
the Registration Rights Agreement or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in this Agreement, the
Certificate of Designations, the Warrants, or the Registration Rights Agreement
or any other certificate, instrument or document contemplated hereby or thereby,
or (c) any cause of action, suit or claim brought or made against such
Indemnitee and arising out of or resulting from the execution, delivery,
performance or enforcement of this Agreement or any other instrument, document
or agreement executed pursuant hereto by any of the Indemnities, any transaction
financed or to be financed in whole or in part, directly or indirectly, with the
proceeds of the issuance of the Series C
16
Preferred Shares or the status of the Buyer or holder of the Series C Preferred
Shares, the Warrants, or the Conversion Shares or the Warrant Shares, as an
investor in the Company, except for any Indemnified Liability which directly or
primarily results from the particular Indemnitee's gross negligence or willful
misconduct for which such holder shall indemnify the Company in the same manner
as provided in this Section 8. To the extent that the foregoing undertaking by
the Company may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
9. GOVERNING LAW: MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Delaware without regard to the
principles of conflict of laws. Any dispute or controversy between the
parties arising in connection with this agreement or the subject matter
contemplated by this agreement shall be resolved by arbitration before a
three-member panel of the American Arbitration Association in accordance
with the commercial arbitration rules of said forum and the Federal
Arbitration Act, 9 U.S.C. 1 ET SEQ., with the resulting award being final
and conclusive. Said arbitrators shall be empowered to award all forms of
relief and damages claimed, including, but not limited to, attorney's fees,
expenses of litigation and arbitration, exemplary damages, and prejudgment
interest. Notwithstanding the foregoing, Buyer may at any time and at its
option, whether or not an arbitration action is then pending, initiate a
civil action for temporary and permanent injunctive and other equitable
relief against Company. Company acknowledges that upon any breach of
Buyer's conversion rights hereunder, Buyer's resulting injury may not be
adequately compensated by a remedy at law. Accordingly, upon such breach,
Buyer, at its election and without limitation of its other remedies, shall
be entitled to pursue a claim for specific performance of this Agreement,
and Company hereby waives the right to assert any defense thereto that
Purchaser has an adequate remedy at law. The parties further agree that any
arbitration action between them shall be heard in Atlanta, Georgia, and
expressly consent to the jurisdiction and venue of the Superior Court of
▇▇▇▇▇▇ County, Georgia, and the United States District Court for the
Northern District of Georgia, Atlanta Division for the adjudication of any
civil action asserted pursuant to this Paragraph.
b. COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party. In the event any signature
page is delivered by facsimile transmission, the party using such means of
delivery shall cause four (4) additional original executed signature pages
to be physically delivered to the other party within five (5) days of the
execution and delivery hereof
c. HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. SEVERABILITY. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability
shall not affect the validity or enforceability of
17
the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
e. ENTIRE AGREEMENT, AMENDMENTS. This Agreement supersedes all other
prior oral or written agreements between the Buyer, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No
provision of this Agreement may be waived or amended other than by an
instrument in writing signed by the party to be charged with enforcement.
f. NOTICES. Any notices, consents, waivers, or other communications
required or permitted to be given under the terms of this Agreement must be
in writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile, provided a
copy is mailed by U.S. certified mail, return receipt requested; (iii)
three (3) days after being sent by U.S. certified mail, return receipt
requested, or (iv) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such
communications shall be:
18
If to the Company:
Fourteen Piedmont Center, Suite 100
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
1000 ▇▇▇▇▇▇▇▇▇ Road, N.E.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Transfer Agent:
American Stock Transfer
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Buyer, to its address and facsimile number on the Schedule of
Buyers, with copies to the Buyer's counsel as set forth on the Schedule of
Buyers. Each party shall provide five (5) days' prior written notice to the
other party of any change in address or facsimile number.
g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
assigns. The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Buyer. The
Buyer may assign its rights hereunder without the consent of the Company,
provided, however, that the Company is given written notice by such holder
at the time of such transfer, stating the name and address of such
transferee and any such assignment shall not release the Buyer
19
from its obligations hereunder unless such obligations are assumed by such
assignee and the Company has consented to such assignment and assumption.
h. NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
i. SURVIVAL. The representations and warranties of the Company and the
Buyer contained in Sections 2 and 3, the agreements and covenants set forth
in Sections 4, 5 and 9, and the indemnification provisions set forth in
Section 8 shall survive for a period of one year following the Closing. The
Buyer shall be responsible only for its own representations, warranties,
agreements and covenants hereunder.
j. PUBLICITY. The Company and the Buyer shall have the right to
approve before issuance any press releases or any other public statements
with respect to the transactions contemplated hereby; provided, however,
that the Company shall be entitled, without the prior approval of the
Buyer, to make any press release or other public disclosure with respect to
such transactions as is required by applicable law and regulations
(although the Buyer shall be consulted by the Company in connection with
any such press release or other public disclosure prior to its release and
shall be provided with a copy thereof).
k. FURTHER ASSURANCES. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
1. TERMINATION. In the event that the Closing shall not have occurred
with respect to the Buyer on or before five (5) business days from the date
hereof due to the Company's or the Buyer's failure to satisfy the
conditions set forth in Sections 6 and 7 above (and the nonbreaching
party's failure to waive such unsatisfied condition(s)), the nonbreaching
party shall have the option to terminate this Agreement with respect to
such breaching party at the close of business on such date without
liability of any party to any other party.
m. PLACEMENT AGENT. The Company acknowledges that it has engaged
Greenfield Capital Partners LLC, as a placement agent in connection with
the sale of the Series C Preferred Shares. The Company shall be responsible
for the payment of any finder's fees (which includes cash and warrants to
purchase Common Stock) relating to or arising out of the transactions
contemplated hereby.
20
n. NO STRICT CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any
party.
o. INDEPENDENT COUNSEL. The parties to this Agreement acknowledge that
the Company has received independent counsel form the law firm of ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇ LLP which is acting as its counsel. Buyers have been advised
by ▇▇▇▇ Moss Kline & ▇▇▇▇▇ LLP to seek independent advice with respect to
the terms and conditions of this Agreement and any related agreements
before signing them.
10. CONFIDENTIALITY.
(a) As much of the information and other material furnished under or
in connection with this Agreement (whether furnished before, on or after
the date hereof) as constitutes or contains confidential business,
financial or other information of the Company or its subsidiaries, each
Buyer covenants for itself, and, as applicable, for its directors,
officers, affiliates and partners, that it will use due care to prevent its
officers, directors, partners, employees, counsel, accountants and other
representatives from disclosing such information to persons other than
their respective authorized employees, counsel, accountants, shareholders,
partners, limited partners and other authorized representatives.
Notwithstanding the foregoing, if a Buyer is advised by such counsel that
such disclosure or delivery is required by law, regulation or judicial or
administrative order, then they may disclose or deliver such information or
other after giving written notice to the Company of such requirements.
For purposes of this Section 10(a), "due care" means at least the same
level of care that a Buyer would use to protect the confidentiality of its
own sensitive or proprietary information, and this obligation shall survive
termination of this Agreement.
(b) To the extent that any of the information furnished by the Company
to the Buyers hereof would constitute material, nonpublic information for
purposes of the Exchange Act, Buyers agree not to engage in any purchase or
sale of securities while in possession of such information and prior to the
time that such information is made generally known to the public and Buyers
agree to use due care to prevent their officers, directors, partners,
employees, counsel and other representatives, who have been given access to
such material, nonpublic information, from engaging in any such purchase or
sale during such period.
21
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
22
IN WITNESS WHEREOF, the Buyer and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.
"COMPANY"
HOMECOM COMMUNICATIONS, INC.
By:
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇
Its: Chairman of the Board and
Chief Executive Officer
"BUYER"
----------------------------------------
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
23
SCHEDULE OF BUYERS
Number of Series C
Buyer's Name Address/Facsimile Number of Buyer Preferred Shares
------------ --------------------------------- ------------------
SCHEDULE 3(c)
CAPITALIZATION
OUTSTANDING WARRANTS:
Ladenburg ▇▇▇▇▇▇▇▇ & Co., Inc. 100,000 $ 7.20 May 12, 2002
First Granite Securities, Inc. 75,000 $ 4.00 October 27, 2000
First Granite Securities, Inc. 200,000 $ 6.00 October 27, 2000
Dominion Capital Fund, LTD,
Sovereign Partners, LP,
and Southridge Capital, Inc. 62,500 $14.50625 December 31, 2000
Dominion Capital Fund, LTD,
Sovereign Partners, LP,
and Southridge Capital, Inc. 62,500 $15.825 December 31, 2000
CPR (USA), Inc. 112,500 $ 5.70 March 24, 2004
LibertyView Funds, L.P. 90,000 $ 5.70 March 24, 2004
LibertyView Fund, L.L.C. 22,500 $ 5.70 March 24, 2004
▇▇▇▇ ▇▇▇▇▇▇ 18,750 $ 5.70 March 24, 2004
▇.▇. ▇▇▇▇▇▇ & Company, L.L.C. 6,250 $ 5.70 March 24, 2004
FIMI principals 300,000 $ 3.7375 March 9, 2004
EMPLOYEE STOCK OPTIONS approximately approximately
750,000 $ 4.50
OBLIGATIONS TO REGISTER SECURITIES:
FIMI principals 626,087
SCHEDULE 3(e)
CONFLICTS
The holders of the Series B Preferred Shares have a right of first refusal
to purchase Series C Preferred Shares pursuant to the terms Series B Preferred
Shares private placement.
SCHEDULE 3(f)
FINANCIAL STATEMENTS
Reference is made to all public filings made by the Company with the SEC
available at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇/.
SCHEDULE 3(h)
LITIGATION
None.
SCHEDULE 3(n)
INTELLECTUAL PROPERTY
None.
SCHEDULE 3(p)
LIENS
None.
SCHEDULE 3(u)
TAX STATUS
None.
SCHEDULE 3(v)
CERTAIN TRANSACTIONS
None.
SCHEDULE 4(d)
USE OF PROCEEDS
Working capital.